Draghi pulls a risky rabbit out of his hat 10 Mar 2016 The ECB chief cut rates, said non-bank corporate bonds could qualify for a larger asset buying programme, and flagged new long-term loans. The good news is Mario Draghi is willing to go the extra mile. The bad: he may encourage excessive risk-taking without lifting inflation.
Challenger bank rollup would create real contender 10 Mar 2016 Upstart UK lenders like Aldermore and Virgin Money are growing fast and making reasonable profit. Individually they are tiny next to dominant UK banks. Mashing together nine challengers, however unlikely, would create a 150 bln stg group with decent returns, big enough to matter.
Aviva investors upgrade Friends deal to so-so 10 Mar 2016 The UK insurer has said it will deliver hoped-for synergies from its late-2014 deal to buy Friends Life a year early. Its capital position is greatly improved. But a minus 12 pct total return since the deal broke implies shareholders are still waiting to be convinced.
Carlos Slim builds Spanish empire at skinny price 10 Mar 2016 The Mexican tycoon has been building stakes in builder FCC and property firm Realia. He has made bids for both, at low premiums, after exceeding a 30 pct threshold. Slim has no incentive to offer target shareholders a sweeter offer unless the regulator forces his hand.
Yoox Net-A-Porter is luxury’s less well-off cousin 10 Mar 2016 Sales at the newly merged posh online clothing retailer grew by a fifth last year. It’s dominating the global market. But selling luxury online means dealing with demanding suppliers and capricious consumers. That’s a tough business, as a 4.2 pct operating margin shows.
LSE merger must please three tough crowds 9 Mar 2016 A tie-up with rival exchange Deutsche Boerse should please customers by cutting their collateral needs. But it could unsettle regulators if it sees too many derivatives being booked in one place. Squaring that circle might leave less for a third key constituency: shareholders.
How to beat the rise of the trading machines 9 Mar 2016 Buyside firms are spending more on trader compensation than on technology, and the humans’ share is rising, Greenwich Associates says. It’s a glimmer of good news for bankers whose livelihood is threatened by autobots. But they’ll need a pretty unique suite of skills to survive.
Credit Agricole glosses over the point of fintech 9 Mar 2016 The French lender will invest 4.9 bln euros into digital banking. Yet cost savings won’t bring job cuts. That contradiction works given CredAg’s quirky rural model. But it neglects an inconvenient truth: for investors, fintech’s appeal is to help make staff and branches obsolete.
Inditex magical formula begets magical valuation 9 Mar 2016 The owner of fashion chain Zara’s like-for-like sales in 2015 were its best in a decade. Not bad for a retailer that eschews ads. The luxury valuation that has produced would make sense if not for currency wobbles, and the company’s reticence on the economics of its online business.
Austria may have to accept painful hit on Heta 9 Mar 2016 Bondholders of bust bank Heta rejected a payback offer from Austria. Heta’s guarantor, a province, faces ruin. In an ideal world, bank creditors are held to account and governments ensure insolvency is predictable and fair. But this is Austria, where two wrongs can make a right.
Carney tests limits of central bank independence 8 Mar 2016 Appearing before UK lawmakers, the BoE governor stopped short of formally advising Britons to stay in the European Union. But Mark Carney’s message was clear enough. Central bankers are supposed to be impartial, but fake fence-sitting would have been worse.
Iron ore rally is triumph of hope over reality 8 Mar 2016 Prices for the steel-making commodity may have rebounded. Imports into China increased last month and a new railway building spree could boost demand. But miners still can’t accurately forecast demand and haven’t learned their lesson on supply.
Dixon: Turkey deal offers a lot – if it sticks 8 Mar 2016 An offer to reduce disorderly migration would cut the risk of Britain leaving the EU and Greece quitting the euro. It would also shore up German Chancellor Merkel’s position, helping stabilise the EU and the Schengen Area. What it won’t do is stop anti-migrant populism in Europe.
ECB a month too late for euro zone shock and awe 8 Mar 2016 The central bank needs to boost the bloc’s flagging economy, but all options – from lowering rates to buying more bonds – are controversial. Acquiring more debt from risky countries is the most likely step to work. But with markets less jittery, the time to act may have passed.
Burberry bid would be an extravagance 8 Mar 2016 The trench-coat maker is the subject of takeover speculation but a deal, which could cost 8 bln pounds, doesn’t stack up. Its stock isn’t particularly cheap and costs are already lean. With the luxury sector deteriorating, it’s not clear a new owner could halt slowing sales.
ZTE needs a U.S. solution as soon as possible 8 Mar 2016 The Chinese network-gear giant faces a ban on using U.S. suppliers for allegedly violating sanctions on Iran. That would cripple ZTE: most of its kit and handsets rely on American components. One way or another, it urgently needs to resolve this problem.
Dow-DuPont deal would be tough nut for interlopers 7 Mar 2016 German chemical giant BASF may be considering a counterbid for U.S. rival DuPont. The price would have to include a whopping premium – and cover a $1.9 bln break fee. The tax benefits alone could make the agreed-upon $130 bln union and spinoff with Dow Chemical close to ironclad.
France will labour to copy Finns’ reform progress 7 Mar 2016 The Nordic country is a step closer to shifting away from centralised wage bargaining. French efforts to do the same are running into problems. True, the Gallic economy hasn’t suffered as much as the Finnish one. But low union membership may be more to blame.
Going nuclear still best option for EDF in UK 7 Mar 2016 The French power group lost its CFO over a plan to build nuclear reactors in Britain. The Hinkley Point project is risky and expensive, but the UK has few options if it is to meet energy demand and emissions targets. The generous terms reflect that; EDF ought to push ahead.
Old Mutual carve-up a question of when, not if 7 Mar 2016 The UK group has always looked a weird mix of British wealth manager, U.S. asset manager and African financials arm. Old Mutual is now considering a breakup. The big question is whether South Africa’s troubles are reason to push ahead or wait.